SiTime Corporation

Good afternoon, and welcome to SciTimes' fourth quarter 2022 financial results conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. As a reminder, the conference call is being recorded today, Wednesday, February the 1st, 2023. I would now like to turn the call over to Brett Curry of Shelton Group Investor Relations. You may begin.

Good afternoon and welcome to Sidetime's fourth quarter 2022 financial results conference call. On today's call from Sidetime are Rajesh Vichish, Chief Executive Officer, and Art Chadwick, Chief Financial Officer. Before we begin, I'd like to point out that during the course of the call, the company may make forward-looking statements regarding expected future results, including financial positions, strategy and plans, future operations, the timing market, and other areas of discussion. It is not possible for the company's management to predict all risks, nor can the company assess the impact of all factors on its business or the extent to which any factor or combination of factors may cause actual results differ materially from those contained in any forward-looking statements. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed during this call may not occur, and actual results could differ materially and adversely from those anticipated or implied. Neither the company nor any person assumes responsibility for the accuracy and completeness of the forward-looking statements. The company undertakes no obligation to publicly update forward-looking statements for any reason at the date of this call, to conform the statements to actual results or to changes in the company's expectations. For more detailed information on risks associated with the business, we refer you to the risk factors described in the 10-K filed on February 25th, 2022, as well as the company's subsequent filings with the SEC. Also during the course of the call, we'll refer to certain non-GAAP financial measures, which we consider to be an important measure of company performance. These non-GAAP financial measures are provided in addition to and not as a substitute for or superior to measures of financial performance prepared in accordance with U.S. GAAP. The only difference between GAAP and non-GAAP results is stock-based compensation expense and related payroll taxes. Please refer to the company's press release issued today for a detailed reconciliation between GAAP and non-GAAP financial results. With that, it's now my pleasure to turn the call over to Sidetime's CEO. Rajesh, please go ahead.

Thank you, Brett. Good afternoon. First, I'd like to welcome new as well as existing investors to Sitem's Q4 2022 earnings call. Sitem is the leader in a dynamic new product category called precision timing. In electronics, timing is ubiquitous and ensures reliable functioning of systems. Sitem created precision timing to service the needs of applications like automated driving, 5G, enterprise, and IoT. We are early in our growth as we transform the $10 billion timing market. SciTime has shipped 3 billion precision timing chips to 20,000 customers in 300 applications. We had a solid fourth quarter. Revenue for the quarter was 60.8 million, and revenue for 22 was 283.6 million. This is a 30% growth over the previous year, even though the second half of 2022 was challenging. Non-GAAP income was 14.4 million for the quarter and 82.9 million for the year, which is 29% of revenue. On the product side, Sidetime introduced four new products since the last earnings call. Previously, we had introduced four key performance metrics, as indicators of future revenue, SAM expansion, design wins, ASPs, and single source business. While we don't expect to do this on an ongoing basis, given the current market conditions, we're giving further insight into our business by using these metrics this time. In 2021, our SAM was 1 billion. In 2022, we grew it to 2 billion. We're on track to get to 4 billion by the end of 2024. With a highly differentiated precision time products, SciTime is creating a market where we continue to expand our advantages. Since the last earnings call, we introduced four new products and are on track to introduce five more in 2023. Customer activity for these nine new products which includes architectural discussions and sampling, continues to be robust. Seven of these nine products are in our focus segments, comms enterprise, automotive, and aerospace defense. Last week, we introduced two new Endura product families that expand our presence in the aerospace defense market in applications such as position, navigation, and timing, P&T, tactical communications, network synchronization, and surveillance. Both products deliver up to 10 times better environmental resilience, which is crucial for these applications that operate in harsh environments. Our funnel and design wins continue to grow at a higher rate than in previous quarters. In Q4 22, our design wins grew 55% over the same period in 21. Additionally, 65% of these design wins were in our focus segments of comms enterprise, automotive and aerospace defense. Higher average selling prices or ASPs are an indication of the value that we provide to customers. Our ASPs continue to grow and are expected to be higher in 23 than in 22. As in the past few years, we're not seeing any meaningful loss of business to competitors even though their availability has increased and lead times have shortened. We attribute this to the highly differentiated nature of our products. The customer trust that SciTime has earned is of tremendous importance to us, and a metric of that is the percentage of business that is single sourced. In 23, we expect to continue to have 80% of our business as single sourced. Looking further out, our funnel is in a similar single source position across geographies and market segments. Now, coming to our guidance for Q123. As we said earlier, the shortages of the past few quarters led customers and their contract manufacturers to purchase more than they needed. SciTime is continuously evaluating the inventory situation at our top 50 customers and their more than 100 contract manufacturers. While most customers' inventory is as we forecasted earlier, a new development is that our historically largest customer recently informed us that they have more inventory at their subcontractors than they previously thought. Despite the rest of the business being as expected, this will lead to lower revenue in Q123 than previously thought. We continue to believe Q1 2023 will be the lowest quarter of the year as we expect Q2 to be higher than Q1 and the growth to resume in the second half. In conclusion, end customer demand continues to be generally healthy. Our design wins and SAM expansion continues to grow. Our connections with customers is close and growing through design wins. Sitem continues to be the leader in precision timing, a category that we created and we are confident about our future success. Art?